The markets have been brutal lately. And if you have been investing in Indian markets, you are probably already feeling it. But is the brutal phase over? No one knows. And with the sharp decline in the recent weeks, and with the backdrop of markets going nowhere since almost Sep-2024, the mood is no doubt terrible. More so for new investors who are going through this pain for the first time.
But here’s the thing. When everyone is scared, and sentiment is at its worst, that is usually when the risk-reward equation becomes hugely favourable for the long-term investors. And that is the maths that long-term investors need to hold onto.
That said, and to be fair, adding money when markets are falling feels deeply uncomfortable, and almost irrational, if not scary. You will always wonder what if markets fall a little more? And if the market falls another 5-10% after you have invested, that pain aggravates enormously, more so if you are already sitting on a 15-20% correction from the top. When you have come to equity markets with expectations of getting better-than-debt and inflation-beating returns, times like the current ones can really be testing. And remember markets don’t do what you want them to do on your demand. But from whatever small experience I have in markets, it pays to stay calm and remain objective.
And it makes sense to believe things like Remember God in Good Times & Equities in Bad Times and also, that Cash + Courage + Crisis makes real Wealth, to keep yourself motivated. Easier said than done, but that is how it is.
So if your goals are long-term and still several years away, then ideally, you should be investing more as markets fall. But if your goals are just a few years away, then ideally you shouldn’t be investing in markets even if it seems tempting (to make a quick profit from a rebound). Don’t be greedy just because others are fearful. Be greedy when others are fearful, and if you don’t need the money for several more years.
Keep pushing 👍